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By Suzanne Blake
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President Donald Trump has signaled that he could support at least one proposal to provide relief to student loan borrowers, right as Republicans head into the 2026 midterm elections.
Specifically, Trump said he would consider legislation championed by Republican Representative Anna Paulina Luna of Florida that would cap federal student loan interest rates at 2.5 percent.
"It’s something that I would certainly consider," Trump said. The bill remains pending in the House Education and Workforce Committee. Luna's June 2026 resolution (H. Res. 1386) seeking to bring it to the House floor was referred to the House Rules Committee.
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This would be a significant shift for an administration that has spent much of its second term reshaping federal repayment and forgiveness programs.
Why It Matters
Student debt is a major financial burden for Americans. The issue could again become politically significant heading into the midterms.
Trump's comments come as recent changes to the federal student loan system are putting additional pressure on borrowers.
Under the Republican-backed One Big Beautiful Bill Act, repayment options have changed, and some borrowers, including certain Parent PLUS borrowers, have lost access to income-driven repayment and forgiveness options.
Based on recent polls, borrowers also appear highly motivated to participate in the November elections. A Student Debt Crisis Center survey found 92 percent of respondents said they planned to vote in the midterms. And nearly two-thirds said they had reduced spending on necessities including food, housing or health care because of higher student loan payments.
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What To Know
Trump was asked over the weekend about legislation backed by Luna that would cap federal student loan interest rates at 2.5 percent.
"Yeah, I might because I think she's fantastic," Trump said. After praising Luna and describing her as an early supporter, Trump added: "It's something that I would certainly consider."
Luna subsequently interpreted Trump's comments as support for her proposal.
"@potus said he will support capping federal student loan interest rates at 2.5%!" Luna wrote on X. She added that the issue was something she had "long champion[ed] in Congress."
Federal student loan rates currently vary depending on the type of loan and when it was disbursed. An across-the-board 2.5 percent cap would therefore represent a substantial reduction for borrowers with loans carrying higher rates.
"One of the biggest challenges for millions of Americans in recent years has been rising interest rates. And while mortgage rates are the ones that typically get the most coverage, the steady uptick on borrowing for higher education has also presented barriers for those wanting to enroll," Alex Beene, a financial literacy instructor for the University of Tennessee at Martin, told Newsweek.
"This administration hasn't been completely opposed to capping interest rates on certain forms of debt, as was evident in a proposal from last year when the president called upon credit card issuers to consider capping interest rates on the debt they provide."
US Student Loan Debt Reached Around $1.86 Trillion in 2026
Americans continue to collectively owe well over $1 trillion in student loans.
Federal Reserve data showed approximately $1.835 trillion in outstanding student loans in the fourth quarter of 2025. The balance subsequently increased to roughly $1.86 trillion in 2026.
The Federal Reserve's G.19 consumer credit data put outstanding student loans at $1.86 trillion as of the second quarter of 2026. And Fed data found that the balance had grown by roughly $55 billion from a year earlier.
Lawsuit Filed Against Trump's Department of Education Over Student Loan Debt
Trump's apparent openness to an interest-rate proposal also comes as his administration faces legal challenges over existing student loan relief programs.
Student Defense filed a class-action lawsuit this week against the Department of Education and Education Secretary Linda McMahon, alleging the department has failed to implement a January 2025 decision expanding eligibility for Closed School Discharges for thousands of former students.
Separately, on Friday, the American Federation of Teachers filed another lawsuit targeting the department's handling of Public Service Loan Forgiveness. That proposed class action alleges the department has failed to process PSLF buyback applications for thousands of borrowers and improperly rescinded qualifying payments for some borrowers.
"He (Trump) has flip-flopped on student loan relief multiple times. One minute he signals support for relief, while the next his administration is fighting existing programs in court and forcing borrowers into potentially more expensive repayment plans," Kevin Thompson, the CEO of 9i Capital Group and the host of the 9innings podcast, told Newsweek.
"The reality is that borrowers are dealing with massive confusion, shifting policies, and a court system packed with appeals. At some point, borrowers have to stop listening to what is being promised and start looking at what is actually being done."
What Is the Latest With Student Loan Relief?
Trump's proposal is far from the only potential student loan change under consideration.
Luna's interest rate legislation has not advanced despite Republicans controlling Congress, but other bipartisan proposals to lower federal student loan interest rates are also pending.
There have also been discussions among student loan borrowers for a pause on federal student loan payments or a moratorium on moving borrowers out of the SAVE repayment plan until processing issues are addressed.
"If enough support is gathered at putting a cap on interest rates for student debt, not only could the proposal gain traction, but it could provide some much needed relief for many struggling to make higher payments," Beene said.
What Has Trump Said Previously on Student Loan Debt?
Trump's record on student loans has differed sharply from Biden's push for broad cancellation.
However, during his first administration, Trump signed legislation making qualifying student loan discharges for borrowers with disabilities exempt from federal taxation. He also signed legislation expanding Public Service Loan Forgiveness to additional repayment plans under certain circumstances.
Trump also signed the CARES Act in March 2020. This suspended payments and interest on federally held student loans during the early stages of the COVID-19 pandemic.
The One Big Beautiful Bill Act substantially changed repayment options for federal student loan borrowers. The administration has faced litigation over other proposed changes to forgiveness and lending programs.
"For years, borrowers have been caught in a confusing cycle of uncertainty, but the Trump administration’s policy is simple: if you take out a loan, you must pay it back," Education Under Secretary Nicholas Kent said previously.
How Significant Would the Reduction Be?
Compared with current rates, a 2.5 percent cap would mean:
- Undergraduate borrowers: a reduction of 4.02 percentage points (approximately 62 percent).
- Graduate borrowers: a reduction of 5.57 percentage points (approximately 69 percent).
- PLUS loan borrowers: a reduction of 6.57 percentage points (approximately 72 percent).
For every $10,000 borrowed, annual interest at the proposed rate would be approximately $250, compared with:
- $652 at the undergraduate rate.
- $807 at the graduate rate.
- $907 at the PLUS loan rate.
The proposal explicitly includes retroactive relief for existing federal student loan balances, rather than applying exclusively to new loans.
What Happens Next
For now, Trump's comments are only an indication that he would consider the 2.5 percent interest rate cap. Congress would first have to pass legislation before the president could sign it into law.
The political landscape could also change after the midterm elections.
"Although he (Trump) says he may support Anna Paulina Luna's proposal to cap interest on student loans, what many borrowers recognize is that they need to focus on what is being done versus what may be coming," Thompson said. "Trump has indicated through multiple court cases and appeals that he wants borrowers to repay those loans."
Newsweek’s reporters and editors used Martyn, our AI assistant, to produce this story. Learn more about Martyn here.
Contact Newsweek editors on this story: Gabe Whisnant and James Debens
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